Have you ever asked yourself, “Why is gold so valuable historically?” Gold is one of the first metals to have been valued and considered precious in human history. A small gold bead found in Bulgaria shows that the precious metal was used as far back as 4,500 B.C., making it the world’s oldest piece of processed gold.
Our ancestors valued this precious metal, and this trend continues today. Knowing the history of gold in human civilizations can highlight why investing in gold in the modern age is an excellent choice for growing wealth or diversifying your portfolio.
The Human Fascination with Gold
Every major civilization in human history has put some store of value in gold. Gold first appeared in human history in ancient societies like the Egyptians and Lydians:
- The Ancient Egyptians are known for using gold in jewelry and religious rituals. Gold was generally associated with their highest deity: Ra, the sun god.
- Under the famous King Croesus (or Kroisos), the Lydian civilization is believed to be the first to use gold as a currency and minted the first gold coins in 550 BC.
- While numerous ancient civilizations produced gold bars and ingots in various forms, the pharaoh Menes, responsible for unifying Egypt, may have created the ancestor to modern investment bars. These ancient Egyptian bars were standardized to a weight of about 14 grams and stamped with the pharaoh’s name.
The Economic Significance of Gold
Throughout history, gold has been used as a store of value and a currency in trade and commerce. It was used as currency in many civilizations until the 20th century and is still a valuable investment today.
Gold as a Store of Value
A store of value is any asset that maintains its value over long periods without depreciating. Gold has many natural properties that make it one of the oldest and most reliable stores of value. These include:
- Natural Rarity. Gold is one of the rarest precious metals on Earth. The average concentration of gold in the planet’s crust is approximately 4 parts per billion (ppb), lower than platinum (5 ppb) and silver (7.5 ppb). In comparison, a non-precious metal like copper has an abundance of 60,000 ppb, meaning gold is 15,000 times rarer than copper.
- Durability. Gold is a noble metal, making it relatively durable. While it has a lower melting point than other precious metals, it does not rust, corrode, tarnish, or decay over time. These properties allow gold objects to remain intact over centuries, making them desirable for long-term storage of value.
- Divisibility. Gold is readily broken down into smaller quantities for easy storage and exchange, making it a relatively portable option for currency, trading, and investing. It is often separated into standardized units of various sizes and weights, such as gold bars weighing 1, 10, or 400 troy ounces (ozt) or gold coins.
Gold as a Currency
Gold has long been revered as a symbol of wealth and stability in monetary systems around the world. From ancient civilizations to modern times, it has been used as currency and a benchmark in the form of the gold standard. A country’s currency is directly linked to a specific amount of gold in this monetary system.
Many historical cultures used gold coins as a form of currency:
- Roman Empire. Following the example set by the Lydians, the Roman Empire produced the aureus, its first gold coin. An aureus was worth 25 silver denarii. In 310 A.D., Emperor Constantine replaced the aureus with a new gold coin, the solidus. One solidus had a standardized weight of about 4.55 grams. The solidus was later adopted by the Byzantine Empire and remained in use well into the 10th century.
- Islamic World. The Umayyad caliphate of the late 7th century produced the first gold currency of the Islamic world, the gold dinar. These coins circulated alongside the Byzantine-era solidus.
- Medieval Europe. During the Middle Ages, many civilizations of Europe minted their own gold coins. Well-known examples include the Venetian ducat, the Florentine florin, and the English gold noble.
- Chinese Dynasties. The various dynasties of Ancient China, such as the Ming and Tang, also minted gold coins. An example is the Kai Yuan Tong Bao, which contained many metals, including gold.
- British Empire. The British started minting the gold sovereign, one of the last gold coins with recognition as an international currency in 1817. It has a face value of one British pound, is made of 22-karat gold, and contains approximately 0.235 troy ounces of pure gold.
Although paper money has replaced gold as a primary currency, many government mints continue producing gold coins as investment assets. These coins can be worth more than their face value if you sell to a precious metals dealer or hold them as a liquid asset.
For example, the Half-Ounce American Gold Eagle has a face value of $25 and contains 0.5 troy ounces of gold. However, if you brought this coin in to sell, the value would be based on the spot price of gold and the coin’s gold weight in troy ounces. On September 15, 2023, this was $1,923.58, meaning the coin would be worth around $961.79, more than 40 times its face value.
The Cultural Impact of Gold
Gold has historically been used to produce art, jewelry, statues, and as a material in monumental architecture. It was also significant in many civilizations’ religions and belief systems.
Gold in Historical Art and Craftsmanship
Gold has been used throughout history to produce or enhance art pieces and crafted objects. The use of gold in art elevates its perceived value, showcasing its visual and symbolic beauty:
- Ancient Egypt. In Ancient Egypt, gold was used to make burial masks, coffins, amulets, pendants, and other religious artifacts. The most famous example is King Tutankhamun’s burial mask.
- Renaissance Era. Numerous paintings produced in the Renaissance era have extensively used gold leaf to increase their aesthetic appeal. One of the most famous examples is The Birth of Venus by Sandro Botticelli, who used gold leaf to enhance the beauty of Venus’s hair.
- Japan: The Japanese art of kintsugi (金継ぎ), which translates to “golden joinery,” is a traditional activity using gold to repair broken pottery dating to the 15th century. The essential principle of kintsugi is joining pieces of broken pottery back together, repairing them, and showcasing them as even more beautiful than the originals.
- Throughout History. Many occupations, such as goldsmithing and jewelry craftsmanship, have survived and evolved through the ages. Today’s goldsmiths and jewelers employ traditional and modern techniques to make gold jewels, ranging from hand-engraving to computer-aided design (CAD).
Gold as an Architectural and Religious Element
Although buildings and architectural pieces can be considered art, many world-famous sites have used gold as a religious symbol in their construction. This has contributed to the valuation of gold in ancient and modern societies:
- Saint Peter’s Basilica, Vatican. One of the world’s most famous churches, the Basilica, is well-known for its extensive use of gold. Interior gold elements include golden mosaics, gilded sculptures, and ornate gold decorations. Outside, the dome is covered in gold leaf and tipped with the Palla, a large gold sphere representing the influence of Christ over the world.
- Grand Mosque of Mecca. Also known as the Masjid al-Haram, the Grand Mosque is Islam’s holiest site, surrounding the Kaaba. Most of the mosque’s interiors extensively use gold sculptures and decorations. The mosque’s most well-known gold artifact is the Kiswah, a black cover draping the Kaaba made of black silk and frequently adorned with gold. In 2018, the Kiswah received over 100 kilograms of gold thread.
- Kinkaku-ji, Kyoto. The Kinkaku-ji, also known as the Temple of the Golden Pavilion, is one of Kyoto’s largest Buddhist temples. Its centerpiece is the kinkaku (金閣), or Golden Pavilion. It is a three-story building, with the top two stories covered in gold leaf. The use of gold in Buddhist temples like Kinkaku-ji often symbolizes the Buddhist concepts of purity, enlightenment, and the radiance of the Buddha.
The Psychological Aspect of Gold
Ancient Egyptians considered gold to be the flesh of the gods. The Inca people called it the sweat of the sun, which they revered as a god. While gold has value across all aspects of human society, from art and religion to economics and status, one question remains: Why is gold so valuable historically from a psychological perspective? What makes gold so appealing?
Besides its economic properties and impact on art, culture, and religion, gold has traditionally been an alluring material for multiple reasons.
- Gold is naturally rare. Humans tend to value the rare and unique, and gold’s scarcity makes it a natural candidate for desirability.
- Gold is hard to extract. Even if you find gold, you need access to specific equipment and techniques to extract it from the earth and separate it from other minerals.
- The color of gold is unique. Other precious metals, such as silver, platinum, palladium, and rhodium, are in varying shades of gray. Pure gold is visually distinctive; its color is a shade of yellow.
- The human eye is attracted to gold. As the expression goes, all that glistens isn’t gold. Yet, the origin of this expression is rooted in human vision. According to Leatrice Eiseman of the Pantone Color Institute, our eyes are attracted to surfaces that glisten or undulate. Gold reflects light and glistens uniquely under the light, making it naturally attractive.
Gold as a Modern Investment Asset
Throughout history, our ancestors recognized the enduring value of gold. Today, it remains a sought-after investment.
Modern investors continue to see gold as a hedge against economic uncertainties and a way to diversify an investment portfolio. Whether in coins, jewelry, bars, or scrap, gold is a tangible asset many believe retains value over time.
If you’re considering investing in or selling gold, partner with AU Precious Metals. Our knowledgeable staff will ensure you get a fair and transparent deal. We can guide you through the process, giving you peace of mind and helping you reach your financial goals.
- Expert guidance. Our experienced staff helps with buying and selling, offering tailored advice on investing in gold bullion bars or coins to ensure your investment aligns with your financial goals.
- Non-destructive analysis. With state-of-the-art technologies like X-ray fluorescence (XRF) spectrometry, we can accurately and safely assess the pure gold content and composition of your items without causing any harm.
- Local and convenient. If you’re around the Detroit area, visit our branches in Rochester, MI, or Novi, MI. Alternatively, our mail in program lets you secure an offer for your gold pieces from the comfort of your home.
- Transparent and fair pricing. We summarize your gold’s origins and propose a competitive offer rooted in current market prices. When you accept our offer, we can pay in cash, wire transfer, precious metal bullion, or check.
Let AU Precious Metals Value your Gold Assets Today
There are many answers to the question, “Why is gold so valuable historically?” Whether you consider its economic aspects, benefits as a store of value, cultural and artistic impact, or natural beauty, we value gold in many ways.
Contact our helpful staff today to sell your gold coins, jewels, bars, or other assets. We will assist you every step of the way and ensure you get the best dollar amount for your gold.
As precious metal brokers in Michigan, we can also help you buy and sell other metals, like silver, palladium, rhodium, and platinum.